Posted
by
timothy
on Thursday December 02, 2010 @08:11PM
from the making-it-up-on-current dept.

thecarchik writes "Doug Parks, vehicle line executive for the 2011 Chevrolet Volt, GM's range-extended electric vehicle, confirmed Tuesday that the company loses money on every Volt it sells. The expensive 16-kilowatt-hour battery pack, which likely costs GM somewhere between $8,000 and $12,000, is clearly too expensive to let the company build hundreds of thousands of Volts right away. Just 10,000 Volts will be built in 2011, though GM is working to increase that number. GM plans to chip away incrementally to lower the costs of the specialized components in the Volt, especially the power electronics. The price of consumer lithium-ion cells has fallen 6 to 8 percent annually since their 1989 launch; the large-format cells in automotive packs seem likely to follow the same curve and as costs are lowered the Volt may stop being a loss for the company."

All reports but this are saying that GM is breaking even on the Volt, which is pretty believable given its high price. Whether it's profitable or not probably depends on accounting rules. I expect they're really making a small marginal profit, but using Hollywood accounting to turn it into a loss.

Reminds me of the joke about two guys that selling watermelons on the side of the road. They buy them from farmers for $1, and sell them to customers for $1. The one guys says to the other, "We aren't making any money doing this, you know what we need?" The other replies "Yea, a bigger truck."

You're misreading the difference between constant costs (overhead) and variable costs (production costs). Volume only works if you can get the variable costs (the costs of producing each item) below the profit of selling each item.

Economies of scale (making each item cheaper to produce by producing more) doesn't work for the Volt: the batteries have a constant cost and making more only makes them MORE expensive if anything. This is because the resources to make them are limited and increasing demand causes prices to increase.

Therefore they can't overcome the cost penalty by making it up in volume. This move only makes sense for GM if the practice and market establishment of selling now will later be useful for them when making the cars is profitable. There's another explanation: the owners of GM are pushing this for political reasons. Considering the rhetoric about making them make cleaner cars [whitehouse.gov] when the bailout occurred, it would be a conspiracy theory to NOT believe that the government had a hand in this.

No, it wouldn't be a conspiracy theory to not believe in a conspiracy. Unless that were the conspiracy. My question is, who is behind this conspiracy to make us believe that there's a conspiracy? Clearly they're doing it to draw attention away from the truth of their non-conspiracy. Perhaps this GM bailout could have absolutely nothing to do with the Illuminati and the Freemasons. Maybe the Volt isn't a coverup for the Kennedy assassination. Once you go down the rabbit hole...you'll probably find rabbits.

You are right you are in idiot. The batteries do not have a constant cost. They have a decreasing cost as even damn blurb said so "price of consumer lithium-ion cells has fallen 6 to 8 percent annually since their 1989 launchprice of consumer lithium-ion cells has fallen 6 to 8 percent annually since their 1989 launch"
Seriously wtf did you put any effort in your ideas at all?

Not to mention the fact that the Prius was a loss-leader. People who were in the general Prius demographic but couldn't afford one (or who wanted more leg room, or more seats, or something else) were lured to Toyota lots, and ended up driving off with Corollas or Camries, which do make money.

The batteries are a variable cost, much like the steel to make the car, the tires on the car, the labor that is used to build each car, etc. The cost is associated with each car built. Constant costs are fixed costs. These would be the costs associated with the plant the cars are built in, the robotics used to build the cars, the building maintenance of the plant, etc.

Let's think of it another way: If the Chevy was to make 10,001 Volts, they would have to

On the other hand, the purchasers of GM's most expensive automobiles get treated just as well as the folks who buy a stripped down Cobalt.

I would say they really need to get a handle on what it means to provide quality customer service and how it fosters brand loyalty, but unfortunately there are people who are so blinded by the shiny bowtie that they will put up with the piss-poor after-sale service so GM sort of gets a get out of jail free ticket there. I would like to support American made products, but

It's simply amazing how much stupid there is that's been moderated up!

GM isn't a government agency. In case you weren't paying attention, it's being restructured in what really amounts to a form of bankruptcy. It's close to paying back every dime it borrowed, and it's now almost certain that the taxpayers will ultimately pay very little for saving GM. So much for your implied "gubbmint sucks", huh?

Further, not only is GM losing a bit of money on each one sold, this is a good thing! GM is behaving EXACTLY like a start up, delivering an innovative product at a time when it's potentially very useful, and worrying about profits after marketshare and supply channels get streamlined. This is how Amazon became Amazon, how Tesla became Tesla, how Google became Google, how EBay became... you getting the idea yet?

For any virtually ANY truly innovative product, there is always an income gap between initial development and profitability that's usually measured in at least months, and often years. This isn't surprising, it's pretty much a requirement, and if it's not the case, then there's a strong implication that the thing being produced isn't innovative at all!

With the Volt, GM is staking its future on the clean, energy efficient, non-polluting car of the future. Go GM!

Ok now a word from somebody who actually looks at the numbers... I am a quant and run my own money.

1) For the government to come out break even the GM stock price has to hit around 56 (stock has to almost double here).

2) GM behaving like a startup? Excuse while I barf. GM is not behaving like a startup. They are behaving like a financial institution. Look at who is running the show? Look at how they are selling themselves to the financial community. Wait I forgot GM is a car maker!!!

3) Only in the case of GM is there an income gap. Most other companies tend to not have such a huge gap. This is a play by GM to put on a good face that they are "clean" when in fact they are not. Look at the model lineup. They have 4 economical fuel efficient cars. YET they have 5 different Corvette models. Yeah a company that has its priorities straight.

4) GM is not staking its future in clean technology. Look at point 3, and look at their line up. Ford is staking a part of their future on clean cars. Ford is doing the right things. GM is once again putting lipstick on a pig!

Having said all this, it is not impossible to re-engineer GM, but GM has never shown a willingness to do so. GM thinks this little happening as a blip introduced by the market and not by them. Right now GM thinks that they have done everything they and it is smooth sailing from this point on. RIGHT... WRONG! What bothers me is that Ford did real change... They did not take money from the government, and they are going to get hit again below the belt by GM. I just hope the next time GM is let to collapse.

They have 4 economical fuel efficient cars. YET they have 5 different Corvette models.

You do realize that the level of horsepower found in Corvettes is by highly efficient engine designs, right? Did you know that most Corvettes achieve 30+ MPG on the freeway? Sure, those V8s can suck gas when pushed to their limits but they are very good at taking small sips for everyday driving.

You do realize that the level of horsepower found in Corvettes is by highly efficient engine designs, right? Did you know that most Corvettes achieve 30+ MPG on the freeway? Sure, those V8s can suck gas when pushed to their limits but they are very good at taking small sips for everyday driving.

30+ does sound respectable until you realize you're looking at a 2 seater. If GM were working on a 2 seater like the Smart Fortwo, I think you could make an argument about their commitment to making efficient vehicles. And, something tells me the Corvette fleet's real world mileage probably isn't getting the 30+ mpg potential.

1) For the government to come out break even the GM stock price has to hit around 56 (stock has to almost double here).

There are 100 different ways GM can pay back the ownership stake that the government has in GM. The easiest way is to buy back the shares of stock the government has in GM. The government does not have to buy them on the open market. GM can buy a few million shares at $50 bucks a share with their profits. They can giv

"About $7 billion of that came in the form of a straight-up, low-interest loan. And about $13 billion came in the form of an escrow account. So how has GM, which lost $38 billion in 2007 even as it sold 9.4 million cars, paid back its debt? It took money from the escrow account to pay back the $7 billion loan."

In other words, GM still owes ~$20 billion to the People.They lied in their ads when they said they repaid the money.(Gee... I'm shocked.)

As for losing money on the Volts, I remember hearing the exact-same thing about Priuses when they were introduced. Toyota was supposedly losing ~$5000 on each one but then in 2004 they announced they were "breaking even" and now they are making a nice profit on each one. GM's Volt will follow the same path if it succeeds, or else be a giant waste of money if it fails (like EV1 was)..

>>>The Leaf is more innovative because it changes how we think about cars. It forces you to actually think about driving, instead of just going because you can.

The Honda Insight & Civic Hybrids were the same deal - made you think about driving to get 60-90 MPG - while the Toyota Prius averaged just 40-50 MPG but also felt like any other car (it was automatic). The Prius sold ~10 times as many units than Honda's hybrids, precisely because customers DON'T want the car to feel different. They want a hybrid that feels just like their old car.

"GM's Volt will follow the same path if it suceeds, or else be a giant waste of money if it fails (like EV1 was)."

I would just like to point out that the EV1 didn't fail, it was killed. There was a number of factors that played against that car from the begining. If you take a look back a few years, you will see the original Volt design was very similar to the EV1. The Volt was designed to run purely on electricity with no gas engine. When I first read that I was as astounded that GM actually released that

In case you weren't paying attention, it's being restructured in what really amounts to a form of bankruptcy. It's close to paying back every dime it borrowed, and it's now almost certain that the taxpayers will ultimately pay very little for saving GM.

GM went bankrupt in 2009. The stockholders of GM were wiped out, they lost 100%. The bondholders of bankrupt GM will get back less than what they were owed, the exact amount is yet to be determined. I'd estimate about 100 billion dollars of wealth was destroyed by GM as a result of the bankruptcy. This was private wealth, not government loans.

The new GM ("NGMCO Inc") that emerged from the bankruptcy of 2009, unburdened of its massive debt, 30% of its workforce, and retiree obligations, and granted new loans

Sure, burning coal in a power plant is cleaner than burning it in our cars, if we could even do that. But burning coal in a power plant is dirtier than burning gasoline in modern cars. I personally know someone who used to be employed climbing smokestacks to check emissions, including coal plants. Every single stack he checked was operating in excess of permitted numbers. Every fucking one. Meanwhile, every car made since 1996 throws a code and will fail an emissions test if there is a problem with the emis

With the Volt, GM is staking its future on the clean, energy efficient, non-polluting car of the future.
Great to hear that GM is doing clean, energy efficient, non-polluting.However, the volt sure as shit is not that car. It is a parallel POS hybrid no different prius and other hybrids. Once Volt switches to pure electric like leaf, then I will consider buying one. Until then, I do not want to inherit all of the maintenance hassles of BOTH types of drives (electric batteries combined with ICE continual ma

FWIW, the US government wasn't buried in debt or routinely running massive deficits until Reagan/Bush Sr. Then Bush Jr. came along and for the first time ever the government was stupid enough to start wars (which are really quite expensive) with not only no plan to pay for them, but while cutting taxes at the same time. Today, the same people who voted for the likes of Dick "deficits don't matter" Cheney are screaming bloody murder about "Obama's deficit spending" with no apparent comprehension of how surreal this and their other behaviors are.

Meanwhile, Congress (at the behest of the party of "fiscally responsibility") is deciding whether to saddle us with $3.6T or $4.2T of further debt by extending the Bush tax cuts for the next 10 years. The same titans of responsibility absolutely refuse to consider the idea of paying off our debt with taxes, but can't seem to name anything that consumes more than.1 percent of the federal budget when pressed for programs to cut.

(I consider the modern Republican party to be nothing more than a scam that seeks power for the explicit purpose of perverting the United States into some combination of theocracy and corporate plutocracy. I hold the Democrats in marginally less contempt; At least they generally offer the people a reacharound while they're screwing us)

Somehow we've entered a world where the 2 choices Americans have to vote for are:1. Vote for the party that wants to lower taxes by borrowing 420 billion dollars a year from China, or2. Vote for the party that wants to lower taxes by borrowing 360 billion dollars a year from China.

These positions are not only fiscally irresponsible/insane, they are morally reprehensible. The standard of living of the average person in China (see FoxConn employee) is substantially less than that of the average Amer

(I consider the modern Republican party to be nothing more than a scam that seeks power for the explicit purpose of perverting the United States into some combination of theocracy and corporate plutocracy. I hold the Democrats in marginally less contempt; At least they generally offer the people a reacharound while they're screwing us)

The Democratic Party exists to occupy the space that would otherwise be taken by a real opposition party. They're like the placebo thermostat building maintenance installs in the office so the workers can think that they're adjusting the temperature and quit complaining.

The bailout was intended to get them through the bankruptcy by allowing them to shed obligations that made it impossible to continue doing business as they had. Union contracts were renegotiated, and pension and medical obligations were reduced. It allowed GM to cut the overhead by several thousand dollars per vehicle. The European and Japanese companies building in the US were not hampered by such heavy requirements, and have long been able to undercut GM on costs because of this.

Technically, they're only losing money because their retired employees are refusing to die. It's those selfish geezers who are stealing from the rest of us. What, you want GM to whack them just so your tax bill comes down by 25 cents? That's the kind of solution Hitler would be proud of - I'm disgusted that you even suggested it.

You mean how Tesla funded it's R&D with those who were willing to part with $100K-$150K for a sports car, which is now funding their drivetrain for vehicles between $25-50K (Tesla Model S and Toyota's new electric RAV4)?

The best part about this joke is that it's actually true; if you buy enough of something it gets cheaper, therefore the manufacturing cost drops. So in a way they actually WILL make up for it in volume.

Yes, and no. While most production have economies of scale, without more information we can't be certain if this one does. This requires technology specific information, and business specific information, as to whether they're setup to have economies of scale.

Given this is a new process, it is entirely possible that they are not setup for this.

Without more information, we won't know. However, given they are a desired car, this car has benefits for the rest of the company, and GM has competent management, then we can assume they know all this, and would scale up production if possible.

So, in all likelihood they're telling the truth, or they are really stupid.

Please tell me you are kidding, right? We aren't just talking about a bulk discount. We are talking about a battery that, as far as I know, is made specifically for this vehicle (as there aren't any off-the-shelf batteries for this capacity, operating conditions, etc). That means there is a huge overhead specifically for these 10,000 batteries.

I suspect you mean the generic cells that Panasonic is making for the Volt? Casings, electronics, etc, are one thing. But the battery cells are truly not that (or any) different from others of their class.

And there's new technologies (including silicon based) that will supplant them before long... or so we are promised.

100,000 copies per year is typical for general economics to work out for a car company.

Suppliers don't like to make parts for vehicles less than 30-50,000 copies. They love it if a vehicle hits 250,000 per year (provided they can make some profit on each unit). Their costs become the car manufacturer's costs.

All electric vehicle batteries will be a long term cost problem. Lithium has a limited supply (only a few countries actually have mines, and recycling becomes problematic) and so as vehicle demand ra

That information is out there:) There is even a hit of it in the blurb. Batteries are very much an economics of scale technology. I do not understand for the life of me why you would pretend the information is not out there but there is loads of research into this.

Given I work in the very area you're talking about, I doubt the information is out there. The hints in the blurb aren't anything you can go by, to definitely judge a company.

Internally each company based on when they invested in the technology, how much they invested, what their estimated capacity was, what their estimated time to obscolescence was, will have different economies of scale for even IDENTICAL technology. Hell, a company which has 2 plants which produce the same IDENTICAL components, would have

and finally realize the amount energy stored in a ton (literally) of even the latest batteries is nowhere close to a gallon of gasoline. I've said it before and I'll say it again. Until we get cold fusion there will be no widespread use of electric cars.

1) Let's claim gross loss-per-vehicle. We won't make it obvious it was somebody from the company saying it, but we'll allude to it.

No problem! Creative accounting practices can do that. Just assign all the engineering costs to one brand by using their engineering group and claim that marque is losing money, and use the produced "IP" in other brands under the GM umbrella, don't let that brand use their own designs for new product so that the brand's product line goes very stale and sales become very sluggis

You lose money on every product until you've sold enough to pay off the retooling process, the design process and to force the price of new materials/parts to drop. If you spend $1,000,000,000 developing a product that you sell for $50k then you will make a loss to start with - no matter what.

Obviously you've never worked in a highly competitive mass-market industry.
$1 billion R&D / tooling cost is pretty normal for a mass market GM vehicle platform. If you're selling 1+ million vehicles at $50k then $1,000,000,000 is chump change.
If you spend $100 million on development / tooling you'll either lose out badly on unit costs, lose out badly on quality or both against someone like Toyota, GM, Ford, Volkswagen, etc. who are plowing the $1+ billion necessary into each platform.
This is not news purely because GM went into the volt expecting to lose money the first few years. Its not the million vehicles they sell over the next few years that they care about (that's tiny compared to their pure petrol / diesel volume), its the several million hybrids or all-electric vehicles they expect to be selling every year by 2020 that they're focusing on.

GM developed the platform in Australia which most of their cars run on around the world. This is why they all have similar configurations, and feel/look the same. Despite the fact that they source parts from the same/similar suppliers, and keep branding consistent. At the time it was a huge undertaking and Holden (GM's Australian Subsidiary), released a movie called 6 Billion Dollar Baby, which was about the development of the platform and how it had cost Holden (not sure about GM, overall), an estimated 6 Billion Dollars to the release date.

You lose money on every product until you've sold enough to pay off the retooling process, the design process and to force the price of new materials/parts to drop.

Yes, but that's not what "loses money on every Volt it sells" means. That phrase means that they're taking a loss on each marginal unit completely ignoring the fixed costs. What you're describing is, "GM hasn't yet recouped its development costs."

Every major automaker spends billions of dollars a year on research and development costs. And they know that when they launch certain new technologies, they will lose money for some years before costs fall and volumes rise to let economies of scale make a particular new feature or technology profitable.

That almost sounds like what I wrote. And, in case you missed it:

You lose money on every product until you've sold enough to pay off the retooling process, the design process and to force the price of new materials/parts to drop

If you spend $1,000,000,000 developing a product that you sell for $50k then you will make a loss to start with - no matter what.

That's not what this is about. This is not about fixed or one-time costs. This is about gross margins on each item sold. That means the delta between what you can sell a given instance of the product for, and what it cost to make that particular instance above and beyond any expenses already incurred.

If you spend $1bil to develop a product and tool the factor etc, then prior to making or selling any product you are $1bil in the red. You have lost this amount of money even if you never sell a single product. So this cost alone cannot be used to say that you lose money on every item sold.

If, in addition to those costs, building an instance of the product costs $40k in labor, materials, and energy and you sell it for $50k, then you have a gross margin of $10k, and after the sale your total balance for the project is $999,990,000. You have made $10k on the sale. Sell enough product at this margin, and you'll eventually pay off the R&D expenses and the project as a whole will be in the black.

If, on the other hand, it costs $60k to build that product and you sell it for $50k, then your gross margin is $-10k, and your balance after the sale is $1,000,010,000. You have lost $10k on the sale. Every product you sell is actually costing you more money, not making you money. Unless costs are cut or prices raised, you can never pay back the expenses, because every sale simply costs you more money.

That is what it means to say "GM loses money on every Volt built".

However, TFA itself seems to be slightly confused on this distinction, and does not provide any link to the actual alleged quote. If Doug Park actually said that they are going to lose money on every Volt sold, then the 'gross margin' sense is what he meant. If he said that they don't expect the Volt (as in the project) to be profitable for several years, then that most likely means they are selling the Volt for a profit and hope to make back their expenses in several years.

If, on the other hand, it costs $60k to build that product and you sell it for $50k, then your gross margin is $-10k, and your balance after the sale is $1,000,010,000. You have lost $10k on the sale. Every product you sell is actually costing you more money, not making you money. Unless costs are cut or prices raised, you can never pay back the expenses, because every sale simply costs you more money.

They could also produce it as an introduction of all-electric cars for the mass audience, with the intent of pretty much using it as a gigantic ad campaign for GM's long term future, and to get people to associate electric cars with GM rather than let someone else take that spot (as they did with quite a few other labels in the past 20 years, like "reliable" and "hybrid").

This whole 'new technology is pricey and scary' has to stop. It's new, it's expensive, we get it.

Someone (GE in this case) will step up and start buying. As production increases, volume drives the cost down. Technology improvements drive the cost down even further.

It stinks that GM is losing money on these, but they're putting the effort into it, and I have to applaud them for it. Then again, didn't the PS3 and Xbox 360 cost more to make at launch time than they were selling for? Maybe GM is on to something...

It stinks that GM is losing money on these, but they're putting the effort into it, and I have to applaud them for it. Then again, didn't the PS3 and Xbox 360 cost more to make at launch time than they were selling for? Maybe GM is on to something...

(emphasis mine)

Oh, they're on to something, alright. GM is "too big to fail". This makes it easy for them to start risky, costly ventures, because they'll either succeed and make GM rich, or the gov't will bail GM out with more loans until GM is profitable again.

Anyone who blames one party over another for this is a complete moron and a partisan stooge.

And anyone who can't identify which of the politicians are enabling this situation is deaf, dumb and blind.

Listen to yesterday's interview with Vermont's Senator Bernie Sanders. He's not part of the problem. Now go listen to the statement yesterday by Kentucky's Senator Mitch McConnell about how they're going to hold everyone hostage until they can get tax breaks for people who don't need them, don't deserve them, and in many cases don't want them. Now check their voting records. Now tell me all politicians are the same.

Listen to yesterday's interview with Vermont's Senator Bernie Sanders. He's not part of the problem. Now go listen to the statement yesterday by Kentucky's Senator Mitch McConnell about how they're going to hold everyone hostage until they can get tax breaks for people who don't need them, don't deserve them, and in many cases don't want them. Now check their voting records. Now tell me all politicians are the same.

Both parties want tax cuts that Americans don't need or deserve. Claiming that Americans need the Bush Tax Cuts can be disproved by looking at the fact that Americans were able to live prior to the Bush Tax Cuts.

Do most Americans want tax cuts? Sure. Just like most children want to stuff their faces with candy and ice cream. Sometimes you need a parent to say "No, you can't have that, you've had too much of that already and more would be bad for you."

In a democracy, where do you find the parents? While the Republicans are the more irrational and irresponsible party today, the Democrats aren't exactly full of mature and wise statesmen who are making responsible fiscal policy for the best long term interests of the country. The Bush Tax Cuts were passed when the CBO did a 10 year projection of massive surpluses, and so the Republicans said the government should cut taxes because times were so good. Now the Dems and Repubs are saying that the tax cuts are needed because times are so bad.

Taxes go up next year, it will hurt. Living with a 32 inch TV instead of a branch new 50 inch, or driving a $15k car instead of a $30k car, or renting an apartment instead of buying a house is not life-ending. Take the pain, such that your children's children don't have to suffer (as much) for your excessive consumption.

> Then again, didn't the PS3 and Xbox 360 cost more to make at launch time than they were selling for? Maybe GM is on to something...

It made economic sense for Microsoft and Sony to sell at a loss because there was other revenue streams available to make up the initial loss. They get about $10 per game sold even if it isn't one of their own. Lose $100 on the console, sell ten games over the life of it and you are good. Factor in that they KNOW the production cost will drop quickly and it makes more sense. Finally add in the battle for market share angle and it makes enough economic sense that the shareholders aren't going to want blood and souls at the next stockholders' meeting.

None of those arguments are available to GM pissing away tax dollars subsidizing yuppies who want bragging rights for being greener than thou. Selling a Volt today at a loss doesn't open up any future revenue streams. The biggest cost is batteries and they are going to slowly drop in cost whether GM build the Volt now or when they are economically viable. And unless you count the market share of unprofitable green cars (ALL hybrids are currently selling at a loss with the possible recent exception of the Prius) as something valuable there isn't a market share building angle to justify it. It is pure politics.

I doubt the Prius made money when it was first released, at least in Japan. At a certain point, GM will have to learn to design and build electric cars. It may make sense for GM to get this learning experience going, so that they won't be far behind Nissan and will be ahead of some of the other manufactures because they'll be on generation 2 or 3 when Honda is on generation 1. This will also get their name out there. For a long time, Toyota was hybrid car. Honda had one, but it didn't sell as well and didn't get the mind share. Heck, despite the fact many people sell them, Toyota is still the hybrid car thanks to the Prius, just to a lesser degree.

If GM hadn't needed a bailout, I think people would be applauding the move. It's risk taking, trying to move forward past what they've been doing for 50+ years. The problem is it's not their money anymore so people are unhappy with them risking it.

I wasn't a fan of the GM bailout. I would have liked to see them split up and sold out to other car makers or something else. I'm just not sure GM needed to keep being GM.

That said, I think this is a good move. While they are risking money, they are taking risks. The Volt is interesting, and if they just spent the next 10 years waiting for other manufacturers to make electric cars common, they'd just be wasting a big opportunity. Getting ahead of this market could be quite a bit easier than taking back a big chunk of the normal ICE car market. Plus they are only selling/making 10,000. It's not like they are starting with 200,000. It's a good toe-dip start.

Actually, it might make sense for GM to sell the Volt at a loss (not that I think it does, but it might). When Toyota started selling the Prius, they were losing money on every car they sold. At the time, GM had decided not to build hybrids for that very reason (they would lose money on every car they sold). Toyota sold the Prius as a loss leader. They did not start making a profit on the Prius until sometime between 2006-2008 (and I'm not sure that covered the losses they were taking on it before them).

Apple deals with this chicken-egg problem by going to part manufacturers and offers them a deal they can't refuse with prices that allow Apple to create the product at a decent price.

Obviously, their attention to detail and hype-machine allow them to actually meet or exceed their sales targets.

Were GM to create a vehicle that had such attention to detail and if they had a cash hoard with which they could not be reliant on the bank-sharks, then they might be able to use this strategy to create such a compell

Then again, didn't the PS3 and Xbox 360 cost more to make at launch time than they were selling for?

Exactly this. Each PS3 originally cost an estimated $690.23 [slashdot.org] New technology is expensive. Over time, economies of scale and other cost reductions take hold, and products get cheaper. Having paid $x billions of dollars for design+factories+retooling+manufacturing, yes, it costs, and initial sales do not meet costs - that's why we have the economics concept of a breakeven point [wikipedia.org].

One thing that no one has acknowledged so far in this discussion, is just how tight a grip on GM's gonads the Chinese have, a grip that gets ever tighter as the Chinese cut back on their Lithium exports because they need more and more of it themselves.

We do have, here in the US, some promising Lithium deposits, but only one mine, now nearly abandoned, has actually been slightly developed. Bringing these online and producing the usable Lithium to build these batteries with will take an estimated 10 years if

That would change driving habits. But any change that people can absorb will not change anything. Gasoline will not go up to $20/gal. But it will go to $5-8/gal and people will give up other things to afford it. Our society is addicted to the convenience of vehicles.

Nothing new in manufacturing really, but it might be the first time it's been seen in production cars I suspect. You make a bunch at a loss initially, tweak the technology, the manufacturing process, streamline the design and eventually you start making a profit on them.

In some situations, those early losses will be spun back into R&D costs on the budget and targeted as profit that has to be made on future units.

Hopefully they'll stick with it and start driving costs down so that the technology can be made cheaper and is more efficient, rather than pulling the plug (no pun intended) and giving up on it.

Back on planet earth, the UAW actually bought a portion of GM. Why would they intentionally screw up the profits of GM when they have their own money invested in it? After all, you can't extract money from a company that doesn't exist...

I'd rather the bondholders lose the money than the federal government shelling out for the UAW pensions and healthcare costs in the event GM had failed. You are aware that failed corporations can dumpt their pension systems on the US Pension Guarantee system, right? Investing =! riskless.

* Gas/petrol usually costs about 15 cents per mile. This (and other electric cars presumably) will cost just under 4 cents per mile (based on current electricity costs), so the overall cost is only 4x cheaper (I was hoping for a full 10x or even 100x cheaper, but it's still good).

* It takes 10 hours to do a full recharge to do a full 40 mile recharge on 120 volt, but only 4 hours with a 240 volt supply. Maybe America et al. should switch to the 240v power like Europe to get faster cha

We may recall that when the PS3 first came out Sony was losing money on each unit sold. That didn't exactly bring down Sony in the process; nor did it cause people to scream out that it was the result of some great conspiracy.

Yes, but those are 2 totally different businesses. Sony, like MS, took the loss on the hardware knowing that the average ps3-owner would buy 3 to 4 games a year. That is where the profit was made. And this was all calculated from the start. Now, not to many buyers of a car will buy 4 sets of tires each year and when they do, there is no guaranty that they will buy them from your company or from another brand. Unlike the console where you have to sign contracts and hand over license fees to even make a game

Japanese manufacturers such as Toyota/Lexus and Honda. They've been selling hybrids worldwide for around ten years now, and you can bet that they, too, lost money on every sale for at least the first few years. In doing so, they bought themselves ten years to refine their processes, tooling, and supply chains, iron out bugs, and discover (and patent) non-obvious efficiencies and improvements.

Meanwhile, the American auto manufacturers chose to stick with the same old profit-heavy SUVs, elderly sedans, and rental-grade compacts they'd been selling for the past twenty years.

The history of alternate-fuel technology is yet another demonstration of US companies' skill at trading the next decade's earnings for the next quarter's. I have zero sympathy for Chevrolet and whatever learning curve they (and their customers) are about to climb with the Volt, because with any competent management in place they would already have several years' experience manufacturing these cars by now.

It must be difficult to make a profit on selling volts, because you never know how many ampères your customers are going to pull and for how long. Now, selling joules, or watts by the hour, seems a better business model to me.

Providing the same shit service they give to anyone who buys a new car and has trouble with them. They sell you a warranty that doesn't cover anything. Purchased 3 GM's (2 brand new - all, 'high end' GM) - always problems with the dealership doing a poor job on repairs/warranty work/etc. I'm done buying anything GM.

By the way, you might consider substituting"those who care about Earth's ecosystems andhumanity's future" for the term "environmentalists"in your post.And of course substitute "those who don't give a rat's@ss for Earth's ecosystems or humanity's future" for those proud transam owners and other

DOE estimates average of 1.3 lbs CO2 per kWh. Coal (the worst CO2 emitter) emits 2.1 lbs CO2 per kWh. Electric cars get between 4 and 10 miles per kWh. Worst case, that means 0.5 pounds of CO2 per mile. 1 gallon = 19.4 lbs of CO2. So, that's around 38 mpg CO2 emissions equivalent in the absolute worst case scenario. In the average case, we are looking at around 59.7 MPG. Diesel emits more CO2 than gasoline, by a factor of about 1.15. So, worst case is 43.7 MPG diesel, and average is 68.7 MPG diesel. These n

The electricity has to come from somewhere, and the same tree huggers who like to see these 'friendly' vehicles are also the same tree huggers demanding that the filthy smoke belching evil coal burning plants be closed - with no real viable alternative methods of producing electricity for their electric cars.

Um, yes, because coal plants are nasty too. The awesome thing about electric cars is that you can have them powered by coal today for a modest improvement in environmental damage, and then if the coal plant is replaced with something better, then your car automagically becomes "greener". Without having to replace the entire vehicle fleet again.

And sure some tree huggers are against them, but this tree hugger thinks fission is a very viable method of producing electricity.

But even in the meantime, electric cars are better. And the tree huggers do not have the power to shut down coal plants if there is nothing to replace them. So I'm not sure why you're worried.

Paying for gasoline when they can just as easily use a battery and save tons of money over the lifetime of the car.

That's kind of a short-sighted economic summary.

For instance, the extra gasoline cost of a 30 MPG car over an electric car is around $9000 after 100,000. I'd say this is about the limit to the reliability of a gasoline car.

With that being said there are many more factors which would make electric cars more or less advantageous. For instance:
How much more does a battery conversion or battery-powered car currently cost? The Volt's Hybrid-grade batteries are already (currently) $16,000 and a pure-electr

More global warming - not true. DOE estimates average of 1.3 lbs CO2 per kWh. Coal (the worst CO2 emitter) emits 2.1 lbs CO2 per kWh. Electric cars get between 4 and 10 miles per kWh. Worst case, that means 0.5 pounds of CO2 per mile. 1 gallon = 19.4 lbs of CO2. So, that's around 38 mpg CO2 emissions equivalent in the absolute worst case scenario. In the average case, we are looking at around 59.7 MPG. Diesel emits more CO2 than gasoline, by a factor of about 1.15. So, worst case is 43.7 MPG diesel, and average is 68.7 MPG diesel. These numbers are EPA testing of Tesla roadster and Rav4EV.

This is helpful. It is hard for people to wrap their brain around the fact that it is easier to control a point source of energy production than millions of distributed ICEs.

There is also an opportunity to use more green energies over time (wind, hydro, nuclear, etc). So getting cars on the grid can be a net positive. One way it could go very wrong is if the car companies and the electric utilities don't plan how to deal with the increased load. If they work it out such that the charging occurs at night via an intelligent grid then environmentally speaking this should be extremely positive as the existing installed base can meet the increased demand. EVs are the first chance in a long time to dramatically improve air quality because a car itself can't be made "green" but the energy source can be made renewable if it is from a single large supplier.